UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 50-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

Innovation, Universities, Science & Skills COMMITTEE

 

 

ENGINEERING

 

 

Wednesday 21 January 2009

RT HON JOHN DENHAM MP, MARK BEATSON

and PROFESSOR JOHN BEDDINGTON

Evidence heard in Public Questions 521 - 599

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Innovation, Universities, Science & Skills Committee

on Wednesday 21 January 2009

Members present

Mr Phil Willis, in the Chair

Mr Tim Boswell

Mr Ian Cawsey

Dr Ian Gibson

Dr Evan Harris

Ian Stewart

________________

Witnesses: Rt Hon John Denham MP, Secretary of State, Mark Beatson, Head of Analysis, Department for Innovation, Universities and Skills and Professor John Beddington, Government Chief Scientific Adviser, gave evidence.

Q521 Chairman: We welcome this morning the Rt Hon John Denham MP, Secretary of State for Innovation, Universities and Skills, to this final oral session of our inquiry into engineering. We also welcome Professor John Beddington, the government's Chief Scientific Adviser, and Mark Beatson, the head of analysis at DIUSS. Welcome to you this morning and thank you all very much for coming. May I start with you, Secretary of State. It goes without saying that engineering is of absolute central importance to society and of central importance to the government's mission particularly at this very, very difficult time. Your government has a Chief Scientific Adviser and not a Chief Engineering Adviser. It has a Minister for Science but not a Minister for Engineering. It has a Director General and a ten-year framework for science and innovation with no mention of engineering. Why does the government not take engineering seriously?

Mr Denham: Could I start by saying how much we welcome the inquiry and thanking you, the Committee, for your co-operation in changing the date of the meeting to suit me which I do appreciate. Having said that, I suppose I could come back to the Committee and say when you asked to be renamed you asked to include science in the name of your committee, you did not ask to include engineering in the name of your committee. We would both say let us not get too hung up about it. Amongst the team of science advisers, as they are called in departments that John leads, are professional engineers and whose training is in engineering. They may have science in the title but they bring engineering expertise into government policy making. In practice Lord Drayson, as the Science and Innovation Minister, and you have had him as witness, clearly is every bit as engaged in engineering as he is in science policy. I would not read too much into the absence of a word from the label.

Q522 Chairman: Do you feel that in terms of understanding engineering across UK PLC that you actually have a really good handle on the profile of engineering across the UK? Could you do an off-the-cuff speech on that now? I am not asking you to.

Mr Denham: I think I could do that as well, or as badly, as I could do an off-the-cuff speech about science, and the reason for that is we have very similar relationships with the main bodies and institutions that promote engineering as we do with science. The Royal Academy of Engineering is a very close partner of the government at different levels. Ministers are in correspondence and have meetings with the president and the chief executive. We meet with the professional groups of engineers. We engage with particular groups. Claire Curtis-Thomas, the MP, as everyone knows is very prominent in the Woman in Engineering movement and we know of her work. The structures of the department in organisations like the TSB, plus our engagement with things like the Manufacturing Strategy, all bring us very directly into discussions about the issues involving engineering, whether it is the professional use of engineering or the development of industries who will rely on engineers or the future supply of engineers. I do believe that we are as engaged in engineering as we are in science. We tend perhaps not to see them as quite separate activities.

Q523 Chairman: You make speeches on science. You frequently mention, if you look at the department website and the speeches of yourself and Professor Beddington, at other ministers particularly Lord Drayson, science is mentioned time after time but engineering never seems to have a profile in the utterances which are coming from yourself and other senior ministers. Why is that?

Mr Denham: That is a very interesting point. I think it is probably true to say that when we talk about STEM, which we frequently talk about, or engagement around science, it is often taken for granted perhaps by ourselves that embraces engineering as well as what one might perceive as pure science. There is a lot of debate about applied science which very often involves huge engineering skills. It is a fair point to raise, but as a judgment of the department's interest in engineering it would be wrong.

Q524 Chairman: Just try to give us an indication as to when in fact the process by which a civil servant is expected to identify whether or not a policy requires a professional engineering input? At what point does the professional engineer come into the picture?

Mr Denham: Because of the nature of our department that is a very wide-ranging question. If it were a particular issue requiring the expertise of engineers, one might engage with the Royal Academy. In other areas we have just recently been in discussions at official level with the Royal Academy about engineering in the nuclear industry and the future demand for engineers in that area. We engage with the relevant learned society in that area.

Q525 Chairman: Just to interrupt you, it is not the point at which you know you need engineering advice but the point before that. At what point do you say we need engineering advice? Where do the engineers come in within the Civil Service?

Mr Denham: In a department like ours we operate through a lot of arm's length organisations: the Technology Strategy Board, the Research Council and whatever. If, for example, we were to ask which are the areas of future industry and economic activity that we should be aware of that are going to be important to our economic future, we would tend to go to bodies like the Council of Science and Technology or the Technology Strategy Board and we would expect those bodies, and they do, to engage the relevant engineering expertise in coming to their conclusions. Very often I would say it is the bodies that we consult that embody the engineering advice as well as the engineering advice that comes directly into the department.

Q526 Chairman: The actual formulation of policy, you feel that engineering advice is actually brought in at the formulation of policy stage.

Mr Denham: Yes, I do.

Q527 Chairman: How could it be then that in the formulation of policy such as reducing carbon emissions in buildings, installing wind turbines particularly in the seas and building eco-towns that engineering advice was not sought before those policies were announced? We have evidence to support that.

Mr Denham: You have listed three areas of broader government policy. The previous questions you were asking me were about my department and my department's involvement in policy formation. I can only speak as the Secretary of State for DIUSS about my department and the involvement of engineers in there, where I would say to you in confidence that I believe we involve engineering expertise where it is relevant. If you took the area of low carbon technologies, I would be confident that on the low carbon programmes run by the Technology Strategy Board they are consulting actively with professional engineers and academic engineers in the formulation of their innovation platforms, the various noise transfer partnerships they do and so on.

Q528 Chairman: Could I pass a question to you, John Beddington, because you are ostensibly the chief scientist and chief engineer. Why did you not stick your nose into those policies?

Professor Beddington: Can I step back from that, and I will answer the question. The first thing to say is in the network of chief scientific advisers to which John alluded we have three engineers there. We are in the process of recruiting new chief scientific advisers and I think it is highly likely that we will be recruiting engineers to a number of the available posts. In terms of the retrofit issue in buildings, the chief scientific adviser currently in CLG is Michael Kelly, who is a Fellow of the Royal Academy of Engineering, and he has taken a very strong line, and I believe very successfully, in pioneering the need and pointing out the requirements, both engineering and economic, for actually doing a major retrofit. In a similar way, the Foresight Study that I have sponsored, which deals with the sustainable energy management in the built environment, also used very high level engineering input. It reported to the stakeholder community back in November and is being taken forward by CLG as being one of the major issues. The creation of DECC in October meant that we do need to align with those. One of the things that I did, as soon as the department was created, was to arrange to ensure that they had engineering advice because they did not have a chief scientific adviser. Professor Collins has been providing DECC with engineering advice since that department was set up and they have agreed to appoint a chief scientific adviser at director general level. Because DECC has a wide, brief both for climate change and energy, it would depend on the individual but we would be looking for an individual who clearly has the ability to operate within an engineering environment although not necessarily a chartered engineer.

Q529 Chairman: Without being rude or difficult, can I say to you it was actually Michael Kelly who made the comments to us. Michael Kelly said "In my own department there is no-one with any practical building engineering experience on the team considering how new and existing buildings will play their full role in meeting the target, soon to be set in law, of 60 per cent, let alone a punitive 80 per cent, reduction of carbon emissions across the economy." Surely that is a damning indictment of a system which clearly does not take engineering advice at the point in which policy is made. Is that a fair comment I am making?

Professor Beddington: The problem about CLG is that essentially Michael was the only engineer there and I think he has done an extraordinarily good job there. I am meeting with them; in fact, Michael's tenure is ending in the summer and I met with him this week and had the conversation where I urged with them it is absolutely essential that they had engineering in there. One of the things that I did when I first arrived in the department, as Michael had no real support, which is unfortunate, was we transferred someone from my own office to actually work closely with him which I believe has helped things. My input to CLG is to say engineering is one of your major issues. You need to be looking at it and you need to be thinking very seriously to ensure you have that input. The CLG quite reasonably have an issue that part of their brief is social science, an enormous part, so they do need to have social science input. I would not dispute that but the argument I have been making to them, and I have made it this week, is you really have to ensure you have engineering advice in there.

Q530 Chairman: How do you ensure, as the chief engineer, if that is what your role is as well as chief scientist, that in every single department that the advice you have given to CLG is actually the norm? How do you make sure that is going to happen? Do you write to everybody? Do you get ministerial approval? Does the Secretary of State buy into that or is it just a hope?

Professor Beddington: Let me step back from that and give a relatively recent example which is to do with the Severn Barrage. This is a major area where quite clearly the idea of examining this in any detail without engineering input would be nonsense. I wrote to the Secretary of State, not putting it in quite those terms, indicating that it was absolutely essential not only that there was significant engineering input but also there was some appropriate peer review. One of the things I have offered, which is now in hand, is that as the consultation on the Severn Barrage develops that will be looked at by a small group of my own chief scientific advisers, of which three are engineers, and will actually have ongoing input into the team involved there. That is one example and it will be horses for courses. MoD has an enormous requirement for engineers; the chief scientific adviser in MoD, Mark Welland, is a Fellow of the Royal Academy of Engineering and I feel very comfortable about that. The requirement for engineering in other departments is somewhat less but one has to deal with that. What I do have, and I think this is again important, is this network of chief scientific advisers, and perhaps they arguably could be called chief scientific and engineering advisers but you have had that conversation with the Secretary of State. Those advisers have to focus within their department and provide input into our team of chief scientific advisers about whether there are issues where engineering advice is actually needed and perhaps not coming through. They link in and report. Some of them are on departmental boards, some of them have reporting lines to their own ministers, and others are reporting to the permanent secretaries. I rely on that network of individuals to actually flag when there are important issues on engineering. In the case of the Severn Barrage, Brian Collins who, as I indicated, is providing engineering advice to DECC, drew this to my attention. I contacted the Secretary of State and we have taken it further which has all been accepted. There will obviously be issues. For example, eco-towns is one where it seems to me engineering advice should have been sought at an earlier time and I have concerns with that. How that should have been done needs more exploration but I would say that is a clear area where engineering should have been brought in at a much earlier stage and was not. I can see others where things have worked well with lots of successes in a number of ways.

Q531 Chairman: In terms of clear guidelines for policy making, do you feel that rather than a footnote there ought to be a clear statement as to where engineering should come in as part of those policy guidelines? Would that be helpful?

Professor Beddington: I think it would. The other thing I would say is how we engage with the engineering community is really important.

Q532 Chairman: We will come on to that.

Professor Beddington: I will speak very briefly to it then. The engineering community is enormously available. I walked through the door of this job a year ago and it was quite clear to me that I had to engage with the engineering community because so many of the major global issues we are facing have to have engineering solutions. I immediately started dialogue with them and that has been ongoing, and I will go into detail later on. It is extremely important. The fact that many of the problems require some degree of engineering solutions we have to accept and some form of policy guideline about that seems to me to be a perfectly sensible suggestion.

Mr Denham: I wanted to say that we should be quite straightforward and say that across science and engineering the questions of embedding science and engineering policy advice in government decision making is a developing process. The Chief Scientific Adviser has taken that a step forward in the way he is working. The work has been done by my department over the last year, funding the Sciencewise Centre to develop knowledge of public engagement, the report that the Council on Science and Technology produced for me a weeks ago on how government can use academic policy makers more effective, I give to you as indications that ministers know that the situation is not yet where it needs to be and this is a process we need to strength rather than say we have it absolutely all right at the moment.

Chairman: That is a fair comment and we thank you for that.

Q533 Mr Boswell: I want to come back to Professor Beddington. You did mention, rather as a throwaway, that there were cases where it worked well under the existing structure but it would be helpful to the Committee if you were able to give us one or two examples in correspondence. It would be quite useful to re-balance this because we can all think of cases where it has not worked perfectly. I appreciate you are not writing our report so I will not necessarily ask you to give a definitive answer. It seems to me, first, from what you have said, of interest that one needs to get the initial input right. Ministers in another government department are thinking about some energy saving process, or perhaps something which is less obviously engineeringly salient. They need to have, I would suspect, an initial ability to refer to you, and you in turn may need to refer to colleagues in other departments where there seems to be a process issue involved. In other words, they have to be alert to the fact, even if they have no engineering expertise themselves, that they need to use their own departmental expertise where it exists, and that needs to come to you and you need to share it with those in and out of government, the economic stakeholders or whatever you referred to. Is that the sort of formulation that would be optimal if we could do it?

Professor Beddington: Yes, I think so. It obviously depends on issues, and to some extent some issues manifestly demand an engineering input. The ones where we had to think rather more carefully, for example let us take the issue I have been involved in quite a lot, food security, prima facie this is a problem about plant growth and so on but there are really important engineering issues there that need to be addressed. In talking to the EFRA Committee I made that point relatively recently. Just to give you an idea how in these areas where it is not absolutely obvious that you need engineering input, we are meeting with the chief executives of the main engineering institutions. I am meeting with a sub-group of my chief scientific advisers which is dealing with climate change and food security next week with a view to exploring the way in which the Royal Academy of Engineering and the institutions can actually input this process.

Q534 Mr Boswell: My second question is something you also said, and did not expand on, about social sciences. Let me give you an example. What we have not heard evidence on this time is the introduction of energy efficient light bulbs, which we may think is a very sensible thing as I do. This is obviously a very complex process involving both engineering issues, fitting into the existing stock, being compatible and not creating safety or disposal issues, which is straight within the engineering book, but there are also some related social science issues which, in a sense, are implicit in the process: will people use them and can they afford them. I notice the Secretary of State is nodding and may want to come in on this. How do we conduct the band in these rather complex areas and the interaction of the engineering community and its expertise, government and the citizen?

Professor Beddington: I would agree completely that many of these rather complicated issues do not need just engineering and scientific input but social science input. Amongst our community of chief scientific advisers, the chief scientific adviser of the Home Office is in fact a social scientist and head of social science in government so we do get an input at that level. It is quite clear that many of the issues that we look at involve, in a sense, both scientific assessment and engineering assessment but you have to think about the behavioural sciences, and indeed I would include economics there. We need to be thinking about whether economic incentives are sensible or whether, in fact, they actually are counter-protective in some ways. I think that input both from scientists, social scientists and economists is absolutely essential as you take these policies forward. I would agree with you and, I think in the way the Secretary of State indicated, I do not think we are there yet. What we do have as a way of taking this forward, and I mentioned CLG just now in terms of Michael Kelly's successor, clearly you have this issue with the retrofit. You have an economic incentive. In fact, the pay back period on the economics is very short but why have we not had take-up of cavity wall installation or loft installation? It has to be a mixture of social and behavioural issues as well as economic and the engineering solutions as well. I would agree with you and we are working on that. If ever there was an issue that is important, and you have an inquiry about engineering, clearly social science IC is an integral part of the whole community of social science, economics, engineering and science.

Q535 Dr Gibson: Some scientists think the engineers are a bunch of jerks actually deriving from their school days. You are obviously talking about a really coordinated team of people, and no doubt within that there is risk analysis as well where you have to calculate what is going to happen. Who makes the decision? Who gets them all around the table together in one place? Who gets the engineers along with all these other groups of which there may be twenty involved in an eco-town? How do the engineers get the feeling for these other areas, that they are part of a team? If you just ask them for a view and say "Cheerio, thank you very much" it seems like you did not co-ordinate.

Professor Beddington: It would depend on the issue and the department how that actually operates. It is quite reasonable to set up an ideal, and that would be a proper integration of the teams where you work. We understand that is difficult and it does not often happen, I would argue, but it does need to happen and is one of the things that Paul Wiles and I are pushing for. We believe that an awful lot of evidence of evidence-based policy, which I have been commented on about rather recently, has got to include not just scientific policy but social science and engineering issues. They have to come into that.

Mr Denham: I was agreeing with Mr Boswell's point about the breadth of advice. I would make two points, as I see it, from my department. It is true that not every piece of policy making involves the engineer at the arm of the minister or the civil servant sitting there when the decision is made. If you look at developments in the motor industry and advanced manufacturing, that clearly has involved academic input from Julia King, vice-chancellor of Aston University, on low carbon vehicle potential. It involves the research councils engaging with industry and some of the relevant research universities in the West Midlands. It involves input with engineers in companies and the Technology Strategy Board which helped to inform both the automobile strategy work that has happened and the advanced manufacturing. There is a whole amount of engagement in that sort of process of real engineering and other scientific expertise, not necessarily though in the case of a submission to a minister saying can you agree or otherwise this policy. In other words, the ministers agree collectively that we want to develop a clearer manufacturing strategy for the automobile industry and then the engagement of expert advice in the development of that strategy is absolutely critical to the process. It is worth remembering there is far more policy of that sort which gets developed in government than the big one-off decisions that take place at ministerial level. I am broadening the picture of where policy advice takes place. The second point I make, just in general, is because it is my obsession is why I asked the Council for Science and Technology to produce their report for me, is there is a two-way process. Government, in my view, needs to get better at hearing advice from researchers from all sorts of backgrounds and researchers also need to develop their expertise in presenting advice in a way that understands the real dilemmas facing policy makers. We have to come at it from both ends.

Q536 Ian Stewart: Secretary of State, you heard Professor Beddington say that the balance of engineering and scientific advice under his control is developing so, therefore, perhaps the balance is not quite right yet. Are you conscious of that as a policy matter and are you doing anything about it?

Mr Denham: In the sense that I am an advocate in government for strengthening science and engineering advice, yes. Within my own department I am have been very keen to ensure that we have good advice available to us. It is not my job to do John's job. His job is to sponsor the network of advisers across government and he is, as we discussed before, independent of me.

Q537 Ian Stewart: Do you accept that the quality of the advice you receive would be dependent on the balance being right?

Mr Denham: Yes, I would. In my own departmental role, Adrian Smith, who is the Director General of Science and Research, is ultimately responsible in my department for making sure that you get the right science and engineering and social science input into our own department's policy making. That clearly is his responsibility.

Q538 Dr Harris: You mentioned evidence-based policy but you are not going to drag me down that path today. We have had some specific discussion but I want to bring it back to the general. Are you saying that your view is that scientific advice includes engineering advice or do you think there is merit in saying that they are different, with overlap obviously?

Professor Beddington: Thank you for that; I can assure you I am not seeking to drag you down the path of evidence-based policy which we can debate in the future. I would say here there is a clear continuum. In answer to the question should there be a chief engineering adviser, I would argue that would be seriously misconceived because I would point out there is absolutely no reason why my successor should not be an engineer; indeed, previous chief scientific advisers, two actually, have been engineers: Robin Nicholson and John Fairclough, so eminent engineers. The chief scientific adviser does not have to be only a scientist; he could easily be an engineer. He will be called a chief scientific adviser but they will have engineering qualifications and we have had two such appointments in the history of the position.

Q539 Dr Harris: That is just defending the status quo. If you had a chief scientific adviser and a chief engineering adviser then you would generally appoint an engineer to the latter and a scientist or social scientist to the former so you are not rebutting that. There must be another reason why you do not want to separate out, with overlap and close working, those two strands of advice.

Professor Beddington: The point about it is these strands of advice form an essential continuum and to put them into silos would be unhelpful. I have scientific and engineering advice, and what is pure science and what is engineering does not seem to me a fruitful debate as they link across lots of different areas.

Q540 Dr Harris: There is a feeling, and you have accepted, that the content of the advice so far, in general perhaps but certainly in specific examples, has been lacking in the engineering aspects. I think that is recognised on specifics. As the chairman said, your guidelines, which I accept you inherited, on scientific advice and policy making have no substantive mention of engineering at all and I think you indicated that might have to change. What are you suggesting should change in order to make the system you are defending, which is a single person within the continuum, more robust in respect of engineering?

Professor Beddington: The first thing is those guidelines do need to be thought about and it is one of the things that I am going to be discussing with my team of chief scientific advisers. The second thing to say is we need to have, as chief scientific advisers, where appropriate engineers who actually take that role if they are in a department where it is more appropriate to be an engineer than to be a scientist and that should be the appointment. I do not see that that is particularly problematic and indeed it happens; we just discussed Kelly.

Q541 Dr Harris: You would not want to rely on that because if you happen not to be an engineer it might be "We are not a department that deals with engineering." I think you are right that you do need to embed it in the culture. Are you saying that in those departments where there is a lot of engineering, engineering advice will feature as a part of the scientific advice and to a greater extent there is not a case for having, as well as a chief scientific adviser to deal with the social science and the science, an engineering adviser, or chief engineering adviser in specific cases so you do not have a blanket rule saying, which I think is where you are at the moment, no, the departmental chief scientist will include engineering and be an engineer if necessary?

Professor Beddington: That would be my preference for a number of reasons. First of all, I think it is important to try and support the continuum, which I think is appropriate. I think it is possible to get scientific advice and engineering advice within departments in appropriate ways. Departments have engineers or consultants can be brought in. What seems to be key is where there are particular issues that need to be addressed you get the appropriate mix of science and engineering to address those problems and that is the challenge. I do not see that it is helpful to say you have a chief scientist and a chief engineer in a number of departments because how do the responsibilities lay. How is the responsibility for the engineer? Are they only going to provide advice on engineering or are they going to overlap into science? It has the potential to generate some degree of silo activity and one which I do not see is particularly helpful. You clearly need to address problems and ask do those problems need addressing by a mix of scientists, engineers and social scientists. It is the problem we should focus on not the structure; the structure is reasonably robust.

Q542 Dr Harris: What troubles me is in a department which has a chief scientific adviser who is a scientist and not an engineer, and indeed lower down that is the case, while you may desire them to think engineering the fact is over the history of science and engineering in this country science has not been taken much to include engineering. At the beginning of this session the Secretary of State said we asked for science and not science and engineering in our title. We asked for science, got a change and launched an immediate inquiry into engineering whereas you have not even got science in the name of your department. If words meant anything, then you really need to go to science first but it is actions that matter. What worries me is there will be a lack of awareness of the need to get engineering unless there is some constitutional reference to it within a department.

Mr Denham: I do think we are in terrible danger of thinking this is an issue about labels. I would say if any chief scientific adviser in my department came to me and said "I did not include engineering or social science in the advice I gathered together for you because I am a science adviser" I would have thought they had done a pretty poor job.

Q543 Dr Harris: They are not going to say that.

Mr Denham: Or even to have done that in practice. You would expect somebody holding these senior positions to have sufficient knowledge or ability to access knowledge to get all the relevant advice together. It would be a shame if this focused on an issue simply about getting engineering advice into government. I am very open about this. The real challenge is getting the best policy advice, whether that is social science, science or engineering, into government in a systematic way. That is the issue on which I am happy to say I think government has made considerable progress over the last few years but there is still some way to go. Focusing overmuch on engineering, one could easily have a similar discussion with social scientists about the same issue.

Q544 Dr Harris: If you did improve the overall quality of advice on social science, science and engineering, would it be more likely, in your view, for government to follow it more frequently than they do?

Mr Denham: The whole point is you have to ensure that you have the right systems in place for the advice to be presented in a way that is useful for policy makers. Academic advice that does not understand the context of decision making is very hard to use in government, and that is true at a ministerial level or a civil service level. Secondly, the more we improve that, on the other side from the government point of view, we have to improve the receptiveness of civil servants and ministers to that advice. As evidence of the commitment, you have the work that is going on across government to establish government scientific advisers in each department. I have made a number of speeches on this over the last few years so it is no secret my view. Government is not there yet in terms of harnessing the best advice in the most effective way but the more that government gets its structures right and gets the right scientific advice the better we will get. At the same time, as the Council of Science and Technology acknowledge, you have educate the academic community to be able to present the advice in the right way.

Q545 Chairman: You have spent tens of thousands of pounds as a department actually branding the department and branding the names. The reality is that you have admitted that engineering is absolutely at the heart of every major government and global project that faces us and yet the status of engineers out in the country is at a very low level. You are saying there is no connection at all with the fact that the government rarely, if ever, mentions engineering and the fact that the public at large do not regard engineers as very important.

Mr Denham: The evidence is, for example, that 15 per cent of young people regard engineering as a good career choice. That is one positive indicator and comes as a result of the very active work we have been doing to promote the image of engineering. I would challenge the idea. We have not spent ten of thousands of pounds on the branding of the department. I think it was £11,000 so we can quibble on that. It was not huge sums of money. I do not personally believe that the way in which we talk about the department is creating a problem for engineering. Of course we will be very interested in what your Committee's conclusion is from the evidence you have heard. The evidence is we have done a very considerable amount of work to promote the image of engineering, as we have to promote the image of science through the STEMNET ambassadors, through the computer clubs for girls, the science and engineering clubs in schools and all of those sorts of activities which show how keen we are to promote the image of engineering and of science as activities and as professions.

Q546 Ian Stewart: My basic questions are to you, Professor Beddington. First of all, having heard the Secretary of State's statements this morning, and I for one, and am I sure others on the Committee, accept that he has been consistent about this over his period as Secretary of State, is there a profile of engineering in the UK and do you know what it is?

Professor Beddington: I am not sure I understand what you mean by a profile.

Q547 Ian Stewart: Where is engineering carried out in the UK, for example?

Professor Beddington: In many of our major research universities, in government laboratories and in industry, there are very substantial amounts of activity. There is a potential confusion in the sense that there are a plethora of engineering institutions. One of the issues that I encountered when I came in was how one dealt with these. I meet, on a regular basis, six or seven of the chief executives of the major institutions and link in with the Royal Academy of Engineering. I was at Imperial College before I moved to this job and imperial College has an enormous research and engineering base.

Q548 Ian Stewart: I am not going to major on this but who does the intelligence about the engineering profile in this country? Is that your responsibility?

Professor Beddington: By the engineering profile you mean where the work is carried out and who actually does it? It is a mix of things. I would have thought, in terms of engineering research, that would be lie with DIUSS and Adrian Smith's work and the Engineering and Physical Research Council, so that would be monitoring what was happening within the university and research community. In terms of, for example, associated agencies and so on, one of the early places I visited when I arrived was the National Physical Laboratory, and I have been back three times since, which is where there is a very serious amount of very important engineering taking place. If you think about it in particular government departments, by far and away the largest engineering community is actually in the Ministry of Defence.

Q549 Ian Stewart: I am not looking for that sort of detail. I was looking for a general view of whether there is an understanding of the profile across the country. The reason I am asking this question is it stands to reason that we on this Committee are not all engineers. It was good to hear the Secretary of State say what he said earlier but we have to continue asking these questions throughout this session because the witnesses that we have had before us, interestingly including Mr Kelly who was mentioned earlier, I can remember one member of the Committee almost accusing them of being insecure and certainly that they were dispersed, diverse and had not got their act together in their relations with government. They expressed their concerns so we are going to ask the questions on that basis to hear what your answers are so let me press you. We visited, as a Committee, China and Japan recently. We found that there were several members of the Chinese government who were engineers. In Japan the engineering bodies meet with the prime minister on a monthly basis. That does not happen in the UK. Is there a reason to promote the likes of, and I am only using it as an example, the Council for Science and Technology and should a body like this Council for Science and Technology meet regularly with the Prime Minister and perhaps the Cabinet?

Professor Beddington: If I can answer that last question first. In fact, the Council for Science and Technology met with the Prime Minister about three weeks ago and, as you probably know, seven out of the 16 members are actually engineers. We met with the Prime Minister and the discussion we had ranged relatively widely and included the issue that the Secretary of State has raised about the way in which academia provides input into government and the inadequacies of that process currently with suggestions to improve it. It also included a very detailed discussion on infrastructure, and indeed the Prime Minister has actually asked the Council for Science and Technology to go away and think about it. The Council have already started an investigation into infrastructure issues led not by an engineer but led by Mark Walpert but obviously with input from the engineering community. That study will obviously link in with the major engineering institutions and with the Royal Academy of Engineering so it is happening and it is happening at an appropriate level.

Q550 Ian Stewart: When you say it is at an appropriate level, should the royal academies be consulted on a statutory basis in your view?

Professor Beddington: It is not a question I have thought about. I do not think so but it is not a question that I have thought carefully about. My initial reaction, and I would emphasise it is an initial reaction, is probably not. You have lots and lots of opportunities to focus on problems. There is not often much merit in having a visit between presentation by the Royal Academy of Engineering or indeed the Royal Society except via their approach to different problems. That is the key input they can have. I can cite, for example, something that was done jointly which was the Royal Society and the Royal Academy of Engineering study on nanotechnology. There is a Royal Society study on the potential for the use of plutonium in the nuclear industry which involved engineers. There is problem solving that can be enormously helpful but the statutory meeting from time to time does not seem to me to have obvious merit.

Q551 Chairman: I actually found your last answers quite bizarre. We have the Council for Science and Technology, which you have admitted is full of some of the most prominent engineers we have in the land at the moment, and you are talking about a new infrastructure programme which is going to be led by a scientist from the Welcome Trust. Do you not find that quite bizarre?

Professor Beddington: I do not find it bizarre.

Q552 Chairman: Do you not find it rather strange that you have the Royal Academy of Engineering, which is stuffed full of the most eminent engineers in the land, and you have not thought as to whether in fact there ought to be some formal arrangement by which you take engineering advice from them?

Mr Denham: The Council for Science and Technology is a group invited by the Prime Minister. They are extraordinarily eminent researchers and they handle their own internal affairs. If they choose to bring a team together and put the proposals to the Prime Minister that work should be done on infrastructure, as a minister that probably works more closely with them than anybody else I am confident they have sufficient expertise to bring together the right team of people and to draw on the right external expertise and to go to the right people to get the right advice together. I would not get into the business of saying "You should have chosen this person or that person" because the reports they produce are of uniformly high quality and they show the ability to bring the right people together and to consult the right people. In terms of a consultation from a ministerial point of view on a formal basis, it has not occurred to me. I will tell you a short story of the last ten days. The relationship we have with the Royal Academy of Engineering is I receive a letter from the chief executive raising some issues from one of their seminars about supply of skills in the nuclear engineering industry. That prompts me, within a few days, to have a meeting with the junior minister and my officials about the issues that are involved there, which then follows up a meeting with the Royal Academy and my officials and the relevant skills councils and the National Skills Academy. The relationship we have is one like that. If you are running on a basis where the Royal Academy can prompt a whole series of ministerial and official meetings on the basis of a letter, it had never occurred to me that you also need to have a formal statutory relationship because it has gone beyond that. It is a working day-to-day, week in/week out, month in/month out relationship. To then say now once every six months let us have a formal session, it is an interesting thought but it does not seem to be where we are.

Q553 Ian Stewart: What that does is indicate that on an issue-by-issue basis the system may work relatively well. The timescale you gave from receiving the letter, going through your junior ministers and responding and meeting sounds quite reasonable. The motive for me asking the question about whether there was an understanding of the engineering profile was not only about where engineering was done, although I did ask about that, it was also about the status and understanding so there can be anticipation which can inform policy development. If it is accepted that the balance between the advisers is not quite right yet, how can you get that balance right without that intelligence and policy formation structure work?

Mr Denham: Meetings would also take place from time to time between ministers and presidents, as they do with the Royal Society or with the British Academy or similar, or they take place at official level. There would also be the forums in which those sorts of issues are discussed. Those also exist as well and it is not that you only deal with the immediate or the instant. I was perhaps trying to illustrate, by one very recent example, that there is responsiveness in government and a desire to hear and a willingness to take the Royal Academy seriously which complements the more strategic relationship our officials have with them.

Q554 Ian Stewart: In your mind, as the Secretary of State, engineering has had a higher priority in your tenure than it had been before. Let us accept that. Should a prime minister also have that same attitude as you, and is 18 months between a prime minister meeting with the engineering community too long a period and should it be more regular?

Mr Denham: I would be very surprised if somebody would say that is the only engagement that the Prime Minister has with the engineering community because he would meet with people from engineering companies, with professional engineers, with the Council for Science and Technology on a pretty regular basis in a different context. The question you have to ask is would you be better engaging a prime minister every six months or every three months. I would not presume to speak for the Prime Minister or his diary advisers but I know, from my point of view, that my most productive relationships with external bodies are when we come together to deal with issues, whether they are immediate or strategic. If your diary gets completely clogged up with regular formal meetings, it is often quite an unproductive relationship.

Q555 Ian Stewart: Would once a year clog your diary up?

Mr Denham: Once a year would not but if you then got into the habit of mind, and I have seen this before in government, where the Secretary of State has seen them once a year so that is the last we need to bother the Secretary of State. There is a real issue that it can produce a quite counter-productive effect which is more observing the formalities than real engagement. I would like to feel that key people in the engineering profession do not feel that they are excluded from access to government at the different levels they need to be any more than any other group of people who think they have an argument to put.

Q556 Chairman: There is no way this Committee is suggesting that a statutory arrangement with the Royal Academy is about formal meetings. The point that Ian Stewart made, and perhaps between us we did not make it well enough, is do you think that in terms of policy formation you ought to have a statutory obligation to ask the Royal Academy on engineering matters for their advice. That is not about having formal meetings but asking them on key issues for their advice. Your answer is no.

Mr Denham: I am not convinced that it would add to the engagement that we have at the moment in the profession. I would worry that much time and effort would then be taken up by lots of other organisations arguing about whether they should be added to the statutory list or not. We have some key professional bodies but there are lots of other people who would say they we have the expertise in this area or the strength there. We could just divert ourselves. It is the quality of the relationship that matters.

Q557 Chairman: It was not just about meetings because that would be ridiculous.

Mr Denham: I accept that.

Q558 Dr Gibson: Some of the reports and some of the policies are helped and determined by civil servants. The recruitment of civil servants is quite an issue. I do not mean Oxford and Cambridge and all that stuff again; it is passé but still a problem perhaps. I am interested in whether or not people with specialist training, scientists, engineers or whatever you want to call them, but people who can read original papers and make a judgment on it because they have that training and that background. Is that a major feature of the work that is going on in your department or any other department?

Mr Denham: John has been leading the work in developing the professional communities.

Professor Beddington: Yesterday I held a conference, I believe the first, for the community of science and engineers in government. I am head of profession of science and engineering and we had a conference yesterday of about 380 people. There were presentations from Lord Drayson and Sir Gus O'Donnell and 47 per cent of that community, which is a self-selected community, are engineers.

Q559 Dr Gibson: How many is that in total?

Professor Beddington: Let me step back. When I came into government, and we had this discussion at a previous meeting, I was head of profession and I said who are the professions that I am heading, where are they and how do I find them because I want to engage with them as that is part of my job. As you know, that proved to be much more difficult than I had expected. What I did was I said let us have a community who genuinely recognises that they are scientists and engineers. That was done by circulating an email, and so on, which said "We are doing this. Would you like to be part of that community?" A little under 1,600 people elected that they would like to be considered as scientists and engineers and that was in the first flush of this. Yesterday we had a conference with about 380 of them and one of the things we said was "Is this helpful and how do you want to take it forward?" 97 per cent of the responses said this was helpful and they did want to take it forward. I made a commitment at that conference to say we will engage you but you have to go away and tell us what you need as a community of civil servants who are scientists and engineers: what are the key issues. We went through a number of key issues: career development, whether you should be moving into policy or can you be rewarded if you remain dealing with your expertise, all very important questions. I made a commitment that we will continue to do that and we will engage with this community. What I have said to them is you have got to say this is valuable. You have talk to your colleagues who are scientists and engineers in the departments because I reckon we probably have about a tenth of that community joining up and we have to build that up. We will, in my office, be putting resources into building up that community which is self-selecting. It is the individual civil servants who believe, when your grandchildren ask what you are, "I am a scientist" or "I am an engineer." That is how you feel. Those attending were a mix of people who were actually dealing at almost the laboratory or field level but also those involved in policy. There were some interesting discussions we had with that community in which they said "I am in policy but how do I keep my expertise up?" We need to look at that. We need to be thinking in a much more innovative way than we have hitherto about, for example, secondments into academia and vice versa. There are a whole set of issues out here which I think are enormously important and are getting a great deal of my attention. This was the first one and one of the things that came back to me in the discussion was "This is great but is this going to be a one-off." You have had a nice glitzy conference, you have Sir Gus O'Donnell along, and now we are back to the real world. I made a commitment that this will not be the only one. We will have a number of conferences during the year which will focus on themes and we will certainly have an annual one. I think this is the way to do it.

Q560 Dr Gibson: You say they were self-selecting. They were not selected by the people who interviewed them on the basis of their talents and degrees. What degrees did they have or did they get GCSEs or an 'O' Level? How do you think they engage their position being an expert, to use your phrase, in that field? Maybe we do not need experts. God protect us from them. Do you have a feeling about it?

Professor Beddington: This is only a feeling and I would have to look at statistics. We sent out a questionnaire when people joined this community and we can share that with you if that would be helpful. That questionnaire asked about first degrees, and so on, and whether in fact you have a PhD. There is a mix; there are some professional qualifications, higher nationals and things like that.

Q561 Dr Gibson: How many departments did it cover in your estimate? You must have looked at where they came from? We are told it is three departments only who have these creatures.

Professor Beddington: As far as I can tell they were representative across government. There was somebody from the Foreign Office, and you would think that is probably not a place where there would be that many scientists and engineers.

Q562 Dr Gibson: It is a strange way to recruit people. How do you pick a civil servant, because they are articulate, because they have been to Oxford and Cambridge? I will leave that to another time and another place. How are they picked? When people pick someone with a science degree or whatever, what is going through their head?

Professor Beddington: The statistics are not comprehensive but let us focus on the senior civil service. There are 180 scientists and engineers in the senior civil service and that is a greater number than economists and a greater number than a number of the other professions.

Q563 Chairman: What do you mean by the senior civil service?

Mr Beatson: Pay band 1 to 3, which in slightly old money was Grades 5 and above.

Q564 Dr Gibson: £60,000 a year or something like that.

Professor Beddington: Science and engineering has a higher representation than the other, what you might call, analytic professions. At the level of the recruitment into government, a number of departments recruit directly. MoD, for example, recruits engineers and scientists directly and does that recruitment itself. Other departments take, for example, the fast stream which I know you have had some discussions about. This is slightly esoteric so bear with me. Effectively fast stream recruitment is occurring as a fast stream, and academic background is not here. Once that is recruited, there is a subset of that stream which is the science and engineering fast stream and a number of departments actually bid for that. The number of departments that are bidding for science and engineering fast streamers is relatively low. This is the three departments that you were referring to. It is now four because DECC is bidding for one. This is one of the areas where I really have to engage with the departments. I have three fast streamers in the government office of science who have just come in for a year and they are absolutely excellent. They come from, as you might expect, a science and engineering background and I find them breathtakingly good.

Dr Gibson: Are you going to break these figures down and present them or do we have to ask you questions through parliament? Will you publish this information that is coming forward now? You should be singing it from the rooftops. All these young people going into science and do not know what the hell they are going to do with their careers, here is a career. I have never heard this said before. I have always heard the argument America is 100 miles ahead of us in terms of numbers of people with science training in the civil service.

Q565 Chairman: That is a hugely positive comment you have made.

Professor Beddington: As you can see, I take this issue extremely seriously and it is part of my agenda. I have absolutely no issue with publishing these figures.

Mr Denham: People did not know, until John started doing this work, who was out there. It has revealed a much more positive position than we would have anticipated.

Q566 Dr Gibson: The position has always been the reverse: scientists do not go into the civil service because their techniques and expertise are not used. We want clever people from the LSE, social science degrees. Is there going to be a follow-up on this now?

Professor Beddington: The community I can say was enormously encouraged by this conference; it worked very well. We are going to be working with my team in getting the government on opposite sides and with the heads of science and engineering professions which is across government. Each department has a head of profession who is either sometimes the chief scientific adviser, sometimes a senior civil servant in the department, but I have a committee that I chair and that committee is now enthused. The vast majority of them attended the conference and were coming up and saying we can now take this forward and actually act properly as head of profession in the individual departments. I am acting for government as a whole and my job is to facilitate it. I would hope we will have a conference in January every year and some other ones on individual themes. We will also set up some form of web communication in which jobs and so on are advised. We will have some discussion forums where there will be the opportunity for people to raise issues; indeed we need to be thinking about it. One of the interesting things about the statistics that I quoted you is that in that 47 per cent 36 per cent of them were engineers and 11 per cent said they thought they were both scientists and engineers.

Q567 Dr Gibson: They have been hiding their light under a bushel for years working away within government. Are there similar people in Downing Street and the Cabinet Office? Were they there yesterday and have you drilled in there to find if they are in there?

Professor Beddington: Sir Gus O'Donnell was there so that is from the Cabinet office.

Q568 Dr Gibson: He is everywhere!

Professor Beddington: Paul Drayson gave a presentation and Gus O'Donnell gave a presentation, and that buy-in from very senior figures was very important to the community and provided real encouragement.

Q569 Chairman: We were struck very much in the old Science and Technology Committee when your predecessor made the quote that scientists hide their qualifications for fear that it would hinder their advancement within the civil service. What you are indicating is a reversal of that trend and I can tell you, from the Committee's point of view, we are incredibly encouraged by that.

Professor Beddington: I was aware of that. Indeed, I talked to both Sir David King and Lord May, and indeed his predecessor, and this probably ten years ago was a real concern and probably was a concern until quite recently. We have to reverse that tend and it is absolutely essential that we reverse that trend. I think in his presentation Sir Gus O'Donnell essentially endorsed that approach.

Mr Denham: From a ministerial point of view, we are looking both for good quality scientific advice but also for civil servants who are confident themselves in handling scientific advice even if it is not their area of expertise. This is what this work sustains as well as the more detailed subject specific scientific advice.

Chairman: That was at the heart of this line of questioning, to try and make sure that is happening.

Q570 Ian Stewart: Can I talk about the skills agenda? We were all concerned about the financial situation and its impact on skills. First of all, there seems to me and the Committee that the engineering community is a plethora of different councils, academies and institutions. Are you satisfied that the existing structure is co-ordinated enough to deliver the government skills agenda?

Mr Denham: I think there are two elements to that. There are obviously a large number of professional associations in different strands of the profession and I do not regard that as my area of responsibility. The second thing is the delivery of skills where you are right: in addition to the professional bodies you have Sector Skills Councils and other organisations. My own view is that we are developing a skill system that is significantly more responsive to the needs of the economy and the needs of employers than was the case several years ago when it was much more of a provider-driven system. We ask increasing the capacity of the organisations and the system to shape it and to deliver what they want. The development of, for example, The National Skills Academies, of which there will now be four, covering different aspects of engineering, the way in which we are working with the Sector Skills Councils with the compacts to deliver certain numbers of trainees in particular areas, and the strengthening we are having of the analytical capacity of the skills system to understand future needs. All of those are giving us a much more responsive system. In engineering if you look at some of the key indicators we have seen sharp increases in the number of apprenticeships which shows the investment that we have been making there is paying off.

Q571 Ian Stewart: Are you getting a clear and consistent message from the engineering sector?

Mr Denham: I think our knowledge is improving all the time. One of the things that we still need to understand in more detail is exactly why labour markets operate in the way they do. You get to a point where simply counting the number of people training for a particular qualification, looking at the labour market and gaps, does not quite tell you why people choose the particular career paths they do. Why are certain proportions of some engineers much more likely to practice as engineers than other engineering professions? Following on the work we have already done on the labour market in relation to STEM Skills, we are doing further research to understand those ideas better. Overall, yes, we have an increasingly clear picture about current and future needs for skills and the determination to make sure the skills system provides, as I described in a speech a few months ago, the right people in the right place at the right time.

Q572 Ian Stewart: We have been talking about this economic downturn situation and its impact on skills retraining but how does government ensure that for those still in employment that their skills training is maintained during this current financial situation?

Mr Denham: I do think we need to distinguish between the medium, long term and the very short term. In my mind the current economic events do not change particularly the long-term projections we have about the demands for skills in terms of young people who are now 12 who would like to be engineers and practising in ten years' time. That will not be changed by any of this. In the short term we are making changes to the skills system to make it more flexible and responsive so that, for example, for SMEs the Train to Gain system is now delivering training in bite-sized chunks which are about up-skilling or re-skilling in particular areas of activity. That is a shift from our previous focus on full qualifications and first qualifications. In more normal times that concentration on the fuller qualification is the right thing to do but at the moment it is very important to maintain people in work, to get skills in which produce proven productivity and profitability very quickly because it maximises the chance of those companies to continue to do successful business and to hang on to the people they have got. In the New Opportunities White Paper we published last Tuesday we announced a tripling over the next year and a half for career development loans. That is aimed at a slightly different part of the market: those people who need to refresh their professional skills perhaps with a shorter course at higher education level. We want to expand quite significantly the capacity of higher education to meet that need for people whose skills need to be refreshed. In the short-term all the emphasis is on making the system more responsive, more flexible and quicker moving. The longer term challenges are pretty much the same as we would have been talking about six months ago.

Q573 Ian Stewart: In relation to the cross-departmental work, how do you co-ordinate with DCSF on the STEM Skills agenda and are you satisfied that policies on schools, FE and HE are actually joined up?

Mr Denham: If you took the promotion of STEM Skills, there is a board at official level that operates between the two departments which is headed by Adrian Smith who is our director of science and innovation. He chairs that but it has people from outside government and the two departments. The coordination between the investment that DCSF are making in the promotion of STEM Skills, the work we fund on STEMNET ambassadors, and the activities of that sort I think is good. We have clearly worked very closely with the DCSF on the promotion of the diplomas, particularly, for example, the engineering diploma which is being accepted now by Oxford and Cambridge and other engineering departments as being an entry qualification to those areas. There is good coordination at that level. We have worked with them last year on how universities can work with schools to strength school science where the offer is not as good as it should be at the moment. You can always point to improvement but it is a regular issue of discussion at official level and also at ministerial level.

Q574 Ian Stewart: Finally, there is a view that engineering as a university subject is under-funded compared to say medicine. Do you accept that and what are you doing about it?

Mr Denham: We do not. We know that has been raised with you as a Committee and that prompted us to seek advice from the Higher Education Funding Council and their advice came very strongly back to me. Firstly, they do not fund every course individually; money goes to institutions and they allocate it. The Higher Education Funding Council's view is that there is not a bias against the provision of engineering courses in the way the funding system operates. Some people would argue that because extra money goes into engineering as a strategic and vulnerable subject there might be an incentive to do it. The advice I have, prompted by the questions raised in your Committee, is that actually the issue of expanding supply of engineering places to meet an increased demand, which is what we are working towards, is not a constraint to finance. That is the best advice I can give you as a committee.

Q575 Chairman: We are asking you what government is doing to respond to the skills need particularly in engineering but do you feel you get a sufficiently consistent message coming from the engineering community about what they need?

Mr Denham: I think the answer is yes but I focus on two things, and one is it is not good enough to try and come up with a gross number and say this is the number of people you have got. When you pick into it you find that sometimes people are saying what we have not got is engineers with ten years' professional experience. With the best will in the world I cannot magic up engineers with ten years' professional experience overnight. Other people are not talking about the number of people with qualifications but about the immediate employability of people coming out, so that is an issue not so much about numbers but about internships and the professional experience people get when they are studying. Overall we want to increase the gross numbers coming through the system. We do get information about what is needed but we usually have to dig beneath the headline statement "We have not got enough X" to understand what the real issue and problems are. The second thing I would say, and I flagged this up in the autumn, is we try to develop a skills system where bodies like the Sector Skills Councils, the employers themselves and the training providers can identify and resolve these problems themselves. That is the ideal way the system operates. I think we have become aware, and you were as a Committee, it does not always work in that way. I am looking now very much to say that as the Skills Funding Agency comes into existence if there is an unresolved problem where, although the combination of employer, training provider, Sector Skills Council and so on ought to sort it out it is not being sorted out, then we will need to have some sort of default responsibility to step in, in that situation, not necessarily to run the whole thing but to bring the various organisations together until a solution is found to the problem. We are looking actively at the moment about how that would work in practice. Our aim is get the system flexible, well informed and responsive enough to sort its own problems, but if there are areas where that is not happening there has to be some ability to step in and knock heads together to make sure there is a lead responsibility.

Q576 Mr Cawsey: I wanted to ask questions on innovation but before I get to that research and development is key to all of that. The government has a target to spend 2.5 per cent of GDP by 2010 on R&D which is an ambitious target, so much so that the Engineering and Technology Board say it is not realistic. Do you think we are going to make the target and, if so, how are we going to achieve it?

Mr Denham: Challenging is the word we use. There has been a real increase in R&D spend in real terms over the past period of time but it has not got to that target. The economy as a whole, certainly over the figures we have including the finance sector, has been growing very fast so hard R&D was growing in real terms but we were not getting to the target. The second thing which is widely recognised in the wider economy is the structure of our economy with a lot of diversity, lots of activity in areas like retail and the creative industries and so on which score very lightly on formal R&D, makes it particularly challenging to get to the over 2 per cent target we have had set. That is why in Innovation Nation we set out work we are doing with NESTA to have a broader definition of innovation and a broader series of measures to capture what is really going on. The other good news is that it is clear we have been successful in winning overseas foreign direct investment into R&D in this country and that is largely on the basis of the strength of our science and engineering base.

Q577 Mr Cawsey: What you are saying, and this is not necessarily unfair, is part of it will not necessarily be an increase in R&D but just counting things that we are not counting at the moment.

Mr Denham: Everybody recognises two of the most innovative industries in the world would be retail and creative industries but those score almost nothing at all on formal R&D. It does not mean they do no innovation, it does not mean they do not all depend very heavily on science and engineering skills to be as good as they are, but they do not come up as formal R&D in the statistics and we need measures to capture that activity as well.

Q578 Mr Cawsey: Sir Humphrey would call it challenging and Sir Humphrey would probably get that solution as well.

Mr Denham: I think we recognise the importance of issues like traditional R&D, and that is why we have the Technology Strategy Board and all the other measures we have in place, but it is important not to ignore other important areas of activity.

Q579 Mr Cawsey: In terms of innovation, what we have heard from people who have given evidence to us previously is that there seems to be an acknowledgment in the UK that we are good at research, quite good at moving that on into small companies but then we have this valley of death syndrome where when we try to move it into big manufacturing we flounder a bit. Do you agree with that analysis and, if so, what can the government do to assist?

Mr Denham: Some of the things we have already done are having a marked effect. The money we have put into universities through the Higher Education Innovation Fund have transformed the culture in most universities over the last few years. Relatively small funding gave people the capacity to look at how intellectual property could be translated into productive activity outside of the university itself. The report that was produced for me last year by Paul Wellings, who is the vice-chancellor of Lancaster University, suggested we are converging pretty rapidly with the best in world in terms of the transfer from IP from universities out into the wider economy and that has been a big change. Perhaps the stereotype of the past is becoming a stereotype of the past. We also recognise there is more that could be done to foster the growth of innovative companies and innovative businesses. In Innovation Nation last year we focused on procurement by government and the way in which regulation can help drive demand for new products and, therefore, provide an entry for the new technologies. We have also revamped the Small Business Research Initiative on the suggestion of David Sainsbury. That began to show effect last summer and now two departments, the MoD and the Department of Health, have run competitions using the SBRI attracting small businesses to come up with innovative solutions for which the prize is a contract which gives them that next space in development. There is work in progress but I think we understand now many of the things we need to do to get the whole of the innovation system in place.

Q580 Mr Cawsey: You might not be able to give an answer this very second but perhaps you could inform the Committee at a later stage. Have you got any examples of where this strategy you outlined to us now has led to a move through from research to small manufacturing to big manufacturing?

Mr Denham: It would be optimistic to say that the White Paper we published last March would have got an idea out of the research lab to multinational company in that period of time. I would certainly point to some of the investment made in the electric car market and the infrastructure projects as an example of the type of thinking that reflects what we were saying in Innovation Nation. The Pre-Budget Report in November identified four particular areas of government procurement that looked good areas to try to develop lead markets for these types of products. I remember one was business waste and the other three escape me for the moment but they are in my brief. The influence of that White Paper is beginning to be felt across Whitehall. Departments are producing innovation procurement plans showing how they will use their own procurement to do it. Although it is much too early for me to say, because we said this in March, here is a multinational company that has resulted but we can certainly say that elements of that are now in place.

Q581 Mr Cawsey: Perhaps it is inevitable that when people come to speak to us they tell us some of the problems rather than some of the solutions. One of the examples that was given to us was plastic electronics which was an example that went the wrong way. A lot of the basic work was done in the UK but it was Germany who have come along and taken the initiative. Perhaps we are seeing opportunities that the government identified back in 2007 now drifting away. Do you think there are lessons to be learnt from that and do you think the government's general position is, as far as I can see, we do not particularly pick winners and back them and we have an on-the-fence neutral stance? Do you think we ought to be far more proactive in seeing what these future technologies are and then backing them to the hilt so we will pick British winners and back them whole-heartedly?

Mr Denham: We undoubtedly are moving, and it has been very clear from what Peter Mandelson has been saying, to a sense of having a clear understanding of where our likely strengths are going to be in future economic activity and ensuring we have the necessary alignment of research and innovation policies all the way through to make a success of those areas, which is not the same as necessarily picking an individual company, or even a particular solution to a problem, and saying we are going to work in that particular area. That sense of what he has called industrial activism, a sense of strategic strengths in the economy, is developing quite clearly as a strong theme in government policy and it is one that I have reflected in the work I have done on strategic skills. When you look at something like plastic electronics, key strategic investments were made by government or by agencies by the TSB. I hope we are not breaching any confidentiality but from the informal conversations with people involved in the decision to move to Dresden this was purely an issue about the finances and the choice between going somewhere that had significant amounts of structural aid, as a depressed area in the former East Germany, and the costs of locating here. I do not think you can pick that out, if my understanding of that is right, as an example of government not being prepared to back a sector or see it as important. We are all familiar with the fact that areas in Europe which receive significant structural funds have some advantages.

Q582 Mr Cawsey: Given the expansion of the European Union and the nature of the economies that are coming into the European Union, that is going to be a battle forever, as far as I can see, because we are always going to be in front of these countries. What is the government strategy, otherwise it is all going to go to these countries?

Mr Denham: The strategy was always for us to keep the highest value-added part of the whole chain of development and supply. The example that is often quoted, and I have to say I have never checked this out myself, is most iPods are not made in Western Europe or North America, they are made in the Far East, but the value is nearly all captured in the advanced industrial countries because that is what comes from the higher value-added element. In these technological areas where we have to be is in the highest value-added part of the chain of research, development and supply and is not necessarily going to be in routine manufacturer. That is the way our economy is going.

Q583 Mr Cawsey: The world has come full circle and actually the government strategy is not necessarily to turn technology into large firms within the UK because that could go somewhere else.

Mr Denham: With the new emerging technologies there are going to be few firms that are nationally based anywhere in the world; they are going to be global: research, innovation, design, utilisation, product development in some areas, manufacturing in others, distribution in others, sourcing of raw materials in another. Where government needs to be is to have the policies that say we will capture the largest proportion of the high value-added element of that in our country. That is what we need to be trying to do. If we set ourselves up to say we are going to capture every single part of the value-added chain, including the most routine, the simplest activities, then we are not likely to be successful.

Q584 Chairman: So we get rid of manufacturing.

Mr Denham: No, but the manufacturing we are going to have is going to be increasingly at the more advanced and technically competent area and, therefore, across the piece we have to have the technicians at a higher standard of understanding and autonomy and responsibility. We are going to have the best design engineers in order to make sure we do it at the highest value-added area. It is always the push up the value chain. That is why David Sainsbury called his report The Race to the Top. It is not about losing these industries but understanding how they are changing.

Q585 Mr Cawsey: I slightly share the Chairman's fear. Whilst I accept that is definitely the right way to go in the round, we want to have some of the manufacturing spin-off as well.

Mr Denham: We do but we need the manufacturing of the advanced level that then supports the wealth that goes around it. For example, in aerospace it is very, very important to us that we maintain a base of advanced manufacturing in aerospace, absolutely no doubt about that at all, but much of the money that is made by aerospace is made on the service side of the business and not just the manufacturing and selling of the product. It is by having the two that we are able to capture the maximum part of the wealth.

Q586 Chairman: If we take manufacturing, and you would accept that we do share some concern, we understand the response you made and clearly there is some very sensible logic to that but you have produced a manufacturing strategy, which has been widely supported as being one of the first major manufacturing strategies we have seen, and yet 14 per cent of the manufacturing is in food production, most of which is UK-based, and it is not even mentioned in the strategy. Is that a huge omission?

Mr Denham: I will get back to you on that if I may. That is not a criticism that I had picked up previously.

Q587 Ian Stewart: It is based on evidence we heard last week.

Mr Denham: I will come back on that point.

Professor Beddington: The food industry is manifestly enormously important in the UK and has been rather creative. One of the things that I am involved in now, following the publication of the Cabinet Office paper on Food Matters which was focused primarily on the price spike we were seeing in commodity prices but also much more widely, is they have set up a task force with inputs from a number of departments and groups. I chair the research one. I have also set up what I have called the Food Research Partnership, which would include both producers and retailers, to explore the way in which government and industry can work together and say: what are the important researchable problems so we can take this level forward. It is early days yet. We have had just one meeting and I have a meeting on Friday to review how this task force is going.

Q588 Chairman: Does it surprise you in terms of a manufacturing strategy that food is not mentioned?

Professor Beddington: I could not comment but I think that food is very important.

Chairman: It would be useful to have a response from you but not now.

Q589 Mr Cawsey: I am quite interested in this issue about how you get more innovation and develop industries and all the rest. What lessons do you think we have to learn from other countries that are having more success in this than we are? Do we do that kind of analysis to try and see what lessons there are to be learnt?

Mr Denham: We would have learned from the USA the importance of a good pipeline of financial support for emerging companies. One of the reasons for the development of the Small Business Research Initiative is if you look at the small US hi-tech companies when they move beyond the research stage there is a predictability about the opportunities of getting finance through those mechanisms to give them their first or even their second or third contract. We are learning lessons there from the USA about how that development takes place. In some other areas, particularly the ideas in Innovation Nation about procurement and regulation, potentially our thinking is ahead of many other countries internationally. When we get people coming here to discuss the innovation policy, they find that strikingly interesting because many other countries have tended to have the view, which is the historic one here, that public procurement should always be based at the industry standard at the lowest possible price. I think there is a challenge to us here to turn the concepts we set out last year in Innovation Nation into practice before somebody else comes along and takes the same ideas and does it for us.

Q590 Mr Cawsey: That really is the race to the top.

Mr Denham: It is a race to the top. You can go around the world, Singapore, China the USA, and ask to pick up a copy of their discussion document, Green Paper, White Paper, whatever it might be, on innovation and it is pretty much the same set of questions being asked around the world.

Q591 Mr Cawsey: What is important is the government needs to be seen to be taking steps to promote investment in technologies and commercialisation in the private sector and to get the investment sectors to understand the technological risk. All of that is made much more difficult by the general credit crunch and economic circumstances that we are currently facing. I would argue, probably you would as well, that it is perhaps a good time to invest because you are trying to think where you are going to be in a few years time. What steps do you take to try and make the companies invest and do things now given the immediate concerns they are bound to have?

Mr Denham: You put your finger on it, in a sense, by referring to the credit crunch. It is not so much that we need to get companies to invest, it is the work that we are doing in the banking system to free up the credit system. In other words, the companies we talk to know what they want to invest, they know what they want to invest in, but the difficulty has been the clogging up of the finance system to enable that to happen. The biggest response that government has been making, and of course it applies across the economy but also to the firms we are talking about, is the action we are taking in the banking system with the loan guarantees, developing the support for corporate finance which was announced this week, to get the money flowing again.

Q592 Mr Cawsey: The credit crunch is a global thing and access to finance is not just a problem in the UK. If the government can really push that into the sector, this is the real opportunity to get ahead in the race to the top. Is that not fair comment?

Mr Denham: It is true, and obviously government has a broader fiscal stimulus, but we are also bringing forward capital spending as fast as we can to stimulate the economy as well. On the timescales we are talking about, there is a priority in getting public money into the areas where it can be spent very quickly.

Q593 Dr Harris: Is research an area where it can be spent more quickly than actually building things or is it slower inevitably?

Mr Denham: So much depends on what you are talking about. If you are talking about the income for somebody on a research grant, there will always be unmet demand for that and salaries can be spent very quickly. If we are talking about developing a new laboratory, and we have a number of major projects under way, that can be a matter of years and it is not always easy to short circuit the planning and financial issues involved.

Q594 Dr Harris: What I mean is because of the new fiscal stimulus there is a need to bring forward some spending that can be spent quickly in the economy. I am wondering whether the thinking on that in terms of capital is only in respect of projects, including laboratories which do take time or roads or whatever, or whether the percentage of grants that could be funded, excellent applications which would be spent immediately - scientists do not sit and plan how they are going to spend their grant, they have already planned it - could be increased by front loading more funding into research so non-capital.

Mr Denham: It is fair to say the honest answer is the concentration on the fiscal stimulus through public spending has been on the capital side not on the revenue side. The problem with revenue spending is you tend to build it into your base lines into the future whereas capital can come and be spent in a short period of time so the emphasis in the Pre-Budget Report has been on capital spend. We expect that on the university side, for example, quite a lot of that additional capital spend will be spent in research-related areas, the refurbishment of laboratories, the bringing forward of programmes that may have been planned over a two or three-year period of time, but it is not realistic for us to direct that from the centre.

Q595 Dr Harris: I would have thought a three-year funding proposal is capital because it is three years and is not ongoing. There is no tenure involved sadly.

Mr Denham: No, that is true, but you asked me a question and the honest answer is the emphasis is on capital.

Q596 Dr Harris: We had evidence to suggest the way that engineering research projects were funded was too low risk because it engaged peer review and was not high risk enough to take chances. We had that from some industrialists and head of research and they were pretty much unanimous on that. Do you think peer review ought to be scaled down in the field of engineering in order that we are not too slow in seizing the initiative in funding research into new areas?

Mr Denham: I am going to ask for John's advice on this. This is an issue that is regularly rehearsed right across the research community and not just in engineering. On the one hand, peer review is generally supported, I would say, across the research professions as the best of the alternatives which are available for deciding where the money should go, but there is always an argument that in an ideal world one would have a blue skies fund that was allocated almost on a lottery basis to see what people could do with it. I can plead some Haldane Principle here and say we do ask the research councils to make these difficult judgments.

Q597 Chairman: Therein lies another inquiry.

Professor Beddington: It is very hard to think of an alternative to a peer review system in the academic community which would be seen as equitable. There is obviously an issue about high risk science and in a sense I suppose it might be a thing that could be developed after discussion, to think about some mechanism for saying the quality of the proposer rather than the quality of the proposal, but that would need a lot of discussion because it would have a lot of potential down sides. I understand the issue but I think one does need to preserve the peer review system and it would be very, very hard not to do it. Taking it out of the context of the universities, on the Energy Technology Institute, which I am sure you are well aware of and I sit on the board of that - and I do not think I am betraying any confidence here - the board is actively discussing the profile of the research projects they are going to be funding to actually query and have an expectation that some of these will fail. They will almost feel that the portfolio will not have been successful if they all succeed if you see what I mean. That is an interesting area. It has joint government and industrial funding and an extensive assessment of projects. I think the discussion that I see is important, and I do not believe I am betraying confidence, is that we should be thinking, as part of a balanced portfolio, about some high risk projects.

Q598 Chairman: Despite some of the negative things we have heard during this inquiry about engineering, there is no doubt that Britain has still got a fantastic tale to tell about engineering and we would want to put that on the record. Given the current scenario in terms of the recession or depression, however you want to describe it, what do you think is the role of engineering in getting us out of that? What key role does that have to play and what policies do you, as a Secretary of State right at the heart of this agenda, want to see put in place to make sure that engineering leads us out of the recession rather than simply playing a part?

Mr Denham: I went yesterday to the E.ON Engineering Academy in Ratcliffe in Nottinghamshire where we have worked with that company to develop - they have largely done it but we are helping with training funds - a superb training facility at every level within the industry. If you look at that industry you can see an industry of the future. Whether you look at it in terms of the resilience of our energy supplies, the needs of a low carbon economy, the engineering solutions that are required on the National Grid or off-shore wind power where we are now the world leader, you can say here are areas where our economic future depends on the successful application of engineering skills, to an activity that is going to be the core of this society. It is going to do it in a way that produces jobs of high value-added real skills, good wages, and also gives us the chance to be competitive in these technologies around the world. Part of my job, and my department's job, is to help to nurture industries that will be industries of the future, industries in the broadest sense, and to make sure we have the skills in place. In many of those, if not every single of one of them, engineering skills will be critical to ensuring we are successful in the future. You might say that while my department is very heavily involved at the moment in very short-term responses to retraining of people who may just recently have lost their jobs, we also have a big responsibility to be focused on that future and making sure we have the skills, the research and the innovation policies in place to make a success of the future.

Q599 Ian Stewart: Secretary of State, you will know that this Committee visited China and Japan recently to look at how they encourage young people into engineering. When our Chairman opened up and explained to his counterparts there that we were there to seek their advice based on their experience, the response he got was "We thought you were coming to give us the answers." It seems, of course, it is a global issue. Although it is science and physics, I attended Salford City College at its Pendleton site last Friday where they had a Beacon award awarded for science and physics work and that was done in partnership with Salford University. I had a conversation with them and the funding for the universities and the funding for the colleges is straightforward and core, but the lack of recognition and financial support for joint working in engineering as well as science and physics, subjects which we are trying to encourage young people to go into, is there something that can be done to recognise that partnership working and recognise it financially?

Mr Denham: I would be very interested in pursuing with you the details of that. Again, if I can refer back to yesterday, I was left with the very strong impression of how good the partnership was between this Academy and Aston University. Many of their apprenticeships at Level 3 will now study a foundation degree at Aston University. They were very keen to say to me that they thought one of the great strengths of what they were doing was the partnership between the two, so they did not appear to have had a problem. What we have said to the LSC in the FE capital programme is we do want them to be mindful of the need to develop the right levels of specialisation in the FE college estate. You cannot realistically have every single FE college offering an identical curriculum, particularly in areas which are expensive to provide, but we want to be able to look across the piece and say have we got the right pattern of facilities in place. In somewhere like Greater Manchester where you are developing the Employment and Skills Boards, we would be looking to them very much for advice to say where are the gaps in what we are providing at the moment and how can future investment fill those gaps.

Chairman: On that positive note can we thank you, Secretary of State John Denham, Professor John Beddington and Mark Beatson for your evidence this morning.